RE/MAX 2018 Spring Market Trends Report

NEW STRESS TEST REGULATIONS PROMPT CANADIAN HOMEBUYERS TO INCREASE BUDGETS, RE-EVALUATE HOME FEATURES OR DELAY THEIR PURCHASE. WHILE HOMEBUYERS ARE FEELING THE IMPACT OF REGULATORY CHANGES, THE SPRING MARKET FORECASTS BRIGHTER DAYS AHEAD.

A recent RE/MAX survey conducted by Leger found more than one in four Canadian homebuyers report feeling pinched by the stress test, which came into effect in January of this year. However, projections for the spring market show optimism with most markets expected to remain stable or improve.

Despite all of the factors involved, the spring market across most of the country is forecasted to strengthen as we head into the warmer months. Supply is still low in many markets, and while the prices may not reach the same levels as this time last year, we are expected to see continued healthy price appreciation from the earlier months of this year across many regions in the country.

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The average residential sale price in the Greater Toronto Area dropped to $753,747, down almost 10 per cent from $834,144 in January and February of 2017. With move-up buyers driving the market — many of whom are making their second or third transition — alongside a booming condominium market, prices are forecasted to soften throughout the year. Not all regions in Ontario are being affected like the GTA. In Ottawa, the average residential sale price in January and February was $388,289, up four per cent from the same period in 2017, and Kitchener-Waterloo saw a five per cent price increase year-over-year.

At the same time, the average residential sale price in Western Canada continues to increase. Greater Vancouver saw prices increase almost 11 per cent in January and February to $1,051,513, up from $950,184 during the same period in 2017. Despite reduced unit sales, prices are expected to continue rising. While Victoria is mostly a seller’s market compared to Greater Vancouver, it has also seen an increase in average residential sale price, which was $831,000 in January and February this year compared to $761,000 during the same period in 2017.

It is expected that government intervention and the stress test will continue to play a pivotal role in purchasing behaviour as we look to the months ahead. The Leger survey found that four in 10 buyers have had to compromise on their purchase, and almost one in three opted not to purchase altogether. One quarter of buyers compromised on the size of their home, while 18 per cent made concessions on the location of their home.

Despite these compromises, 55 per cent of homebuyers say they feel like they can purchase the type of home that suits their families’ needs compared to 46 per cent last year.

In Alberta, first-time homebuyers looking for affordability in Calgary and Edmonton continue to drive the market forward, with single Millennials and young couples gravitating toward the relatively stable condominium market. The average residential sale price increased 1.4 per cent in Calgary to $481,775 in January and February of this year, up from $475,288 during the same period in 2017. Meanwhile in Edmonton, a wide variety of inventory offers good opportunities for buyers, resulting in a small increase in activity and stable year-over-year prices to start 2018.

Interestingly, activity in Atlantic Canada experienced increased demand from first-time homebuyers, many of whom are young couples and families. At the same time, the condominium market is being driven by retirees who are looking to downsize. Prices continue to rise across most Atlantic markets, especially in Saint John where the average residential sale price in January and February this year was $201,328, compared to $168,956 during the same period in 2017.

New residential and commercial development projects in markets across the country are expected to fuel demand. Cities most impacted will include Edmonton, Kelowna, Victoria and Fraser Valley in the West and Windsor, London, Hamilton-Burlington, Barrie, Durham, Ottawa, Saint John and Halifax in Central and Eastern Canada.

Victoria continues to be a seller’s market with historically low inventory and short days on market.

Condominiums are seeing the most demand in the market, primarily from single buyers and young couples who are priced out of the single-family homes market. Many newcomers from other parts of Canada tend to settle in Victoria for its warmer climate and seclusion from the mainland. The 2010 Olympics put B.C on the map, increasing demand in Victoria for its affordability over Vancouver.

Condos have seen the most activity in the region due to low inventory levels, affordability and new developments in the area. The OSFI stress test rules and rising interest rates have had the most impact on sale price and activity in the region.

Activity in Kelowna’s housing market was driven primarily by first-time and move-up buyers along with investors.

Prices are expected to remain stable throughout the year. The OSFI stress test rules and the proposed BC speculation tax have had the most impact on sale price and activity this year. Neighbourhoods in northern and southern Kelowna are expected to grow due to the new high-density developments in both areas.

Edmonton’s housing market continues to recover from the recession, and it’s starting to see positive signs.

Activity in Edmonton’s housing market was driven primarily by first-time buyers due to affordability and move-up buyers who were interested in flat sales prices. Prices are expected to remain consistent throughout the year with a healthy inventory of six-and-a-half months. The OSFI stress test rules have had the most impact on price and activity this year. The Windermere neighbourhood in southwest Edmonton is expected to continue to grow and attract more residents.

Activity in Calgary’s housing market was driven by first-time homebuyers and move up buyers.

These first-time buyers were primarily young couples moving in together and young families looking for larger properties. It continues to be a balanced market with detached single-family homes seeing the most demand. The upper-end of the market is seeing increased activity this year, as buyers continue to take advantage of the affordable luxury homes in Calgary.

Saskatoon’s new subdivisions and condo developments are competing for buyers in 2018.

High condo inventory is expected to lead to a slight decrease in prices in that segment of the market, while detached single-family homes have been seeing the most activity in Saskatoon due their high return on investment. Continued economic instability, coupled with higher than usual inventory is expected to extend the current buyers market in Saskatoon.

Activity in Regina’s housing market was driven primarily by first-time and move-up buyers.

Some of these buyers are returning to the area after years of absence. Prices are expected to remain relatively consistent throughout the year with the potential to slightly increase. The OFSI stress test rules, rising interest rates and immigration growth have had the most impact on sale price and activity this year. The city is continuing to grow with proximity to work looking to become an increasingly important liveability factor.

Prices are expected to drop slightly throughout the rest of the year. The OSFI stress test rules, rising interest rates and immigration growth have had the most impact on sale price and activity this year. New developments in neighbourhoods including Devonshire Village and Amber Gates are expected to be the new “hotspots” for homeowners.

Windsor’s relative affordability, compared to the GTA, has led to high demand from move-up buyers seeking detached homes.

Low inventory has created a hot seller’s market, with buyers putting in multiple offers and paying over asking price for properties. New and ongoing construction projects, such as the Hwy. 401 extension and the Gordie Howe Bridge to the U.S., are expected to continue to drive market demand.

London’s market activity was driven by first-time and move-up buyers, primarily young families and couples.

Detached single-family homes continue to see the most demand for their affordability. The OSFI stress test has made an impact on the housing market throughout Jan/Feb and many buyers opt to lower their budget. With this and low inventory, the number of sales has decreased dramatically for the first two months of 2018.

The OSFI stress test rules have had the greatest impact on sale price and activity this year. Development in the city’s north and east end will continue to impact the market. Additionally, the city has increased its land development fees, which are expected to impact new construction this year.

Activity in Kitchener-Waterloo is being driven by the “boom” in the technology sector, by move-up and first-time homebuyers.

Sales are expected to increase in the condo market due to the affordability of this property type, while freehold sales will fall. The OSFI stress test has had the greatest impact on the market this year.

Activity in Hamilton-Burlington was driven by first-time homebuyers, primarily single Millennials and young families.

Buyers looking to downsize have also contributed to some of the activity in the condominium market. Millennial demand and immigration growth have all contributed to a strong detached home market in January and February.

Barrie’s housing market was driven primarily by move-over buyers from the GTA, seeking affordability and good value.

Prices are expected to remain consistent throughout the year, although the volume of sales will likely be lower than initially forecasted. The OSFI stress test rules and immigration growth have had the greatest impact on sale price and activity this year. New condominium and housing projects planned in Salem and Hewitt’s Secondary Plan in 2018 and into early 2019 are expected to increase inventory.

Prices are expected to remain consistent throughout the year, with demand being typical to that of a balanced market. The OSFI stress test rules and rising interest rates have had the most impact on sale price and activity this year. Dawson Heights is expected to be the next hotspot for buyers.

Detached single-family homes are the most sought-after property type in North Bay, driven by move-over buyers.

North Bay is a seller’s market, with low inventory and days on market trending down 20 per cent across all property types. North Bay’s school districts have seen a dramatic change, and families should be looking for neighbourhoods that are walkable or accessible via public transit.

Activity in Oakville’s housing market was driven primarily by move-up buyers coming from other areas of the GTA.

Prices are expected to drop through the year, despite a significant increase in sale price from 2017 to 2018. The OSFI stress test rules, foreign buyers tax and immigration growth have had the greatest impact on sale price and activity this year. New housing north of Dundas Street continues to be developed and new styles of luxury homes are being introduced.

Activity in Mississauga’s housing market was primarily driven by a mix of growing families, young couples and immigrants.

It continues to be a seller’s market with low inventory levels in the first two months of 2018. The OSFI stress test has made an impact on Mississauga’s market, with many buyers taking a wait-and-see approach and shifting their preferences to condos, which offer greater affordability.

Activity in Brampton’s market was driven by first-time homebuyers, primarily Millennials and young families.

It continues to be a balanced market driving condo prices up as a result of the solid demand and affordability. The OFSI stress test has had the most impact on sale price and activity in January and February. Buyers have made adjustments and the spring market looks strong in comparison.

Activity in the Durham region was driven by young couples and families purchasing entry-level homes.

The OSFI stress test and rising interest rates have both contributed to a balance in the market throughout January and February. Detached single-family homes continue to see the most activity, as they are affordable for young buyers.

High demand and limited inventory continue to make the GTA a seller’s market.

The new OSFI regulations, foreign buyer’s tax, rising interest rates and immigration growth have all impacted sales and activity in 2018. Activity in the Greater Toronto Area was primarily driven by move-up buyers, many making their second or third transaction. Detached single-family homes are seeing the most activity, followed by condominiums. Continued high demand for condominiums is expected for the spring market.

Kingston’s housing market was driven primarily by move-over buyers from major urban centres, in search of affordability and good value.

Due to low inventory, it is a seller’s market with prices expected to slightly increase over the course of the year. The OSFI stress test rules, rising interest rates and immigration growth have had the greatest impact on sale price and activity this year. New developments in the city’s east and west ends are expected to have an impact as well.

Activity in Ottawa’s housing market was driven by first-time buyers, government employees and military transfers.

Prices are expected to slightly increase throughout the year. The OSFI stress test rules, Millennial demand and a lack of inventory have had the greatest impact on sale price and activity this year. The $3-billion LRT project has had a positive effect on areas that will neighbour the route, including the Orleans region.

Activity in Saint John’s housing market was driven by first-time buyers, primarily single Millennials and young couples.

It continues to be a buyer’s market with high inventory and long days on market. The detached home market is driven by young couples, while the condominium market is driven by retirees looking to downsize.

Housing activity and sale prices were driven by immigration economic investment in Halifax Regional Municipality, Millennial demand, and in some cases OSFI stress test rules along with rising interest rates. The effects of regulatory changes have been minimal.

Activity in Charlottetown’s market was driven by first-time buyers and move-up buyers, primarily young couples.

It continues to be a seller’s market with low inventory and days on market. Millennial demand and immigration growth have impacted activity during January and February. Detached single-family homes are preferred by first-time buyers, while retirees are driving the condominium market in the region.

Activity in St. John’s housing market was driven by first-time buyers, primarily single Millennials and young couples.

It continues to be a buyer’s market with high inventory and long days on market. The detached home market is driven by young couples, while the condominium market is driven by retirees looking to downsize.